Girding for Higher Food and Fuel Prices

Money Morning submits: By Kerri Shannon
There's no question the staggering rise in food and fuel prices will eat away at U.S. households' income in coming months. But there is the question of how U.S. consumers will cope with those increased costs -- especially when so many are already worried about their jobs, savings, investments and retirement.With gas prices nearing $4.00 a gallon, and the consumer price index (CPI) in February for food-at-home up 2.8% from 2010, consumers are facing an economic double whammy. As food and fuel expenses make up a larger slice of household budgets, consumers have to evaluate just which goods are worth buying.The national average gasoline price was $3.582 on Tuesday, according to GasBuddy.com. Every $1 a barrel increase in crude oil prices means about a 2.5 cent increase at the gas pump, according to Chris Lafakis, an economist at Moody's Analytics. And every 1 cent perComplete Story »

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Money Morning submits:
By Kerri Shannon
U.S. consumers have watched food and fuel prices eat away at their household budgets, and now those price hikes are spreading to other products - with the worst yet to come.

For the last 4 years, the national average retail price of gasoline in the United States stayed within a range of $3.25-$4.00 a gallon. But that all changed this fall, with U.S. consumers now paying an average price of $2.82.

When it comes to a love of the open road, the United States stands apart. Americans drive more than motorists anywhere else in the world, according to the World Bank. When the average price of a gallon of gasoline dropped from $3.70 to just above $2 — a 45 percent drop — in seven months, economists predicted American households would put their unexpected $150 billion windfall to use in shopping malls, restaurants, and online. The hoped-for spending boom has yet to truly materialize – stuck in traffic? – but it’s still on the way.

Analysts expect gas prices to decrease or remain mostly flat not only in 2014, but for years to come. Nonetheless, drivers in some states will see higher prices at the pump, starting January 1. Gas prices may not have seemed all that cheap in 2013. But in fact, prices for the year as a whole were less expensive than they have been. According to AAA’s year-end report, American drivers paid $3.49 per gallon of regular, on average for 2013. That’s the cheapest per-gallon average since 2010; the national average was just above $3.50 in 2011 and hit $3.60 per gallon in 2012.

Analysts expect gas prices to decrease or remain mostly flat not only in 2014, but for years to come. Nonetheless, drivers in some states will see higher prices at the pump, starting January 1. Gas prices may not have seemed all that cheap in 2013. But in fact, prices for the year as a whole were less expensive than they have been. According to AAA’s year-end report, American drivers paid $3.49 per gallon of regular, on average for 2013. That’s the cheapest per-gallon average since 2010; the national average was just above $3.50 in 2011 and hit $3.60 per gallon in 2012.

CALGARY — Conflict on the other side of the world is expected to drive up gasoline prices here in Canada.
Roger McKnight, an analyst with En-Pro International, said Friday that he sees pump prices rising by more than two cents in the Toronto area on Saturday to around $1.42 a litre. Wholesale prices are also rising in the western part of the country.
Canada-wide, the average pump price is currently at just under $1.36, according to price-tracking website Gasbuddy.com.

Following last month's surprising surge in the Empire Fed from a deep negative number to 10.04, the March print was less exciting, declining modestly to 9.24, on expectations of an unchanged number. The new orders and shipments indexes remained above zero, though both were somewhat lower than last month’s levels, dropping from 13.31 to 8.18 and 13.08 to 7.76, respectively. Price indexes showed that input price increases continued at a steady pace while selling prices were flat.

This post is a guest contribution by Dian Chu, market analyst, trader and author of the Economic Forecasts and Opinions blog.Just in time for Christmas, On Wednesday, Dec. 22, U.S. gasoline prices hit an average $3 a gallon for the first time in more than two years, according to AAA’s Daily Fuel Gauge Report. Meanwhile, U.S. stocks and oil also climbed to the highest levels since 2008.